Report: VeraSun to File for Bankruptcy Protection

VeraSun Energy (VSE) is preparing to file for bankruptcy protection, The Wall Street Journal reported Friday afternoon, citing people familiar with the situation.

VeraSun, which boomed along with ethanol production, has been hit hard as commodities prices have tumbled and ethanol projects have looked less desirable and less feasible.

The Journal said that details of the filing were still being settled Friday, citing the people familiar with the matter, and said it was still possible a filing could be forestalled.

The company has secured $250 million in debtor-in-possession financing from Ableco, an arm of New York-based hedge fund Cerberus, the Journal reported, adding that the loan would let VeraSun to continue to operate. That would boost the chances that the company's assets, such as ethanol distillation facilities and distribution networks, would hold their value, the Journal said. The loan would also buy VeraSun time to restructure.

Company creditors have already convened a committee to hammer out a potential restructuring, the Journal reported, citing a VeraSun bondholder. But it said a majority of creditors have to approve a restructuring deal in order for VeraSun to go before a judge to get approval for a prepackaged bankruptcy.

Verasun has hired law firm of Skadden, Arps, Slate, Meagher & Flom LLC as bankruptcy counsel, and is working with financial advisory firm Rothschild Inc., the Journal said.


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Asian Markets Mixed; Europe Opens Lower

Asian markets were mixed Friday as Japanese stocks fell despite the first rate cut in seven years while shares in India soared to catch up with a previous day's global market rally after a holiday there. European markets opened lower.

Investors were also digesting data overnight that confirmed the U.S. economy -- a major export market -- had contracted in the third quarter.

Tokyo's Nikkei 225 index sank 5% to 8,576.98 amid persistent worries about earnings. Investor sold shares after the previous day's 10% surge and ahead of a three-day weekend in Japan. They didn't react much to the Bank of Japan's rate cut, which was widely expected, even if it was a bit less than the typical quarter-point move.

South Korea's market extended the previous session's 12% rally with the Korea Composite Stock Price Index gaining 2.6% to 1,113.06. Australia's key index climbed out of negative territory to close 0.4% higher.

"Clients are a little more willing to re-enter the markets as the sense of panic has subsided a bit and valuations have been hammered to ridiculous levels," said Andrew Yates, vice president of foreign institutional sales at Asia Plus Securities in Bangkok.

"Obviously further volatility is likely but funds are picking up stocks at cheap levels for end of month rebalancing of portfolios," he said.

Hong Kong's Hang Seng slid 2.5% to 13,968.67 after vaulting 12.8% Thursday. Smaller Asian markets such as the Philippines and Taiwan both rose 4% or more, while Jakarta's main index shot up 7%.

In India, the benchmark Sensex index surged nearly 7% as traders caught up with Thursday's rally in Asian markets, when investors cheered a U.S. Federal Reserve rate cut and further central bank steps to boost dollar liquidity in emerging markets.

Early Friday in New York, U.S. stock index futures were about 2% lower, suggesting Wall Street would decline a day after the Dow Jones industrial average rose 189.73, or 2.11%, to 9,180.69. The S&P 500 index rose 2.6% to 954.09.

In Europe, markets opened lower, with Britain's FTSE 100 index down 1.9% and Germany's DAX down 1.2%.

Japan's rate cut comes as nations around the world seek to cushion their economies from the unfolding financial crisis. On Wednesday, the U.S. Federal Reserve slashed its key rate by half a percentage point to 1%, a level seen only once before in the last half century. Earlier this week, South Korea's central bank lowered rates by three-quarters of a point -- its biggest cut ever -- to 4.25%. China, Hong Kong and Taiwan also reduced rates this week.

The Bank of Japan's policy board was split 4-4, so Gov. Masaaki Shirakawa, who has the final say in the event of a tie, voted in favor of the cut.

The central bank warned that "adjustments in the world economy stemming from financial crises in the United States and Europe have further increased in severity."

In Tokyo, Honda Motor Co. fell 13%, Mitsubishi UFJ Finance sank 5.4% and Sony Corp. dipped 2.2%.

U.S. data overnight confirmed the world's largest economy shrank in the July-September quarter by an annual pace of 0.3%, marking the worst showing since it contracted at a 1.4% pace in the third quarter of 2001.

"The U.S. economy obviously contracted a lot more than the data says and it is likely to be revised lower. There are clear signs the contraction accelerated from September onward so the fourth quarter will also be weak," said Yates.

Oil fell below $64 a barrel in Asian trade with light, sweet crude for December delivery down $2.59 to $63.37 a barrel in electronic trading on the New York Mercantile Exchange by Friday afternoon in Singapore.

In currencies, the dollar fell to 97 yen from 98.68 yen, while the euro dipped to $1.2766 from $1.2875 late Thursday in New York.


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Election, Earnings May Move Markets Next Week

For next week, Wall Street will be affected by two major outside influences -- the Presidential and Congressional Elections, and some important economic data. Also, next week is also the last major week for the third quarter earnings season.

Monday

The highest-profile data for Monday are on motor-vehicle sales. The individual auto makers will report their October individual sales starting at 12 p.m. Eastern time, and the numbers are expected to be grim. In total, the September sales were down 1.22 million from a year ago and October -- which is the month where the credit markets got really bad -- is expected to be worse.

General Motors (GM) and Ford (F) will likely trade heavily on the news.

In the earnings schedule, the biggest name to report is credit card issuer MasterCard (MA), which is expected to report a profit of $2.27 a share after the bell. Its competitor, Visa (V), reported decent earnings this week, so traders will be looking to see how consumer spending patterns affected MasterCard.

Other major names include Viacom (VIA), which owns MTV and Comedy Central. Viacom is expected to report earnings of 56 cents a share after the bell.

Utility company Allegheny Energy (AYE), Goodyear Tire & Rubber Co. (GT), and food distributor Sysco (SYY) report Monday as well.

Tuesday

Outside of the political sphere, it should be fairly quiet day for Wall Street on Election Day. The biggest name that reports is financial firm UBS (UBS), which isn’t even a U.S. company. The Swiss bank reports Tuesday at 1 a.m. EST.

Here in the states, ethanol and food processor Archer-Daniels-Midland Co. (ADM) is expected to report a profit of 67 cents a share. ADM may be able to give some good outlook on the future of the alternative energy business, especially in light of oil being down more than half from its all-time high.

Other companies who report include pizza giant Papa John’s (PZZA) and comic book and entertainment company Marvel (MVL).

With regard to the election, the stock markets will be closed before any states are declared for Obama or McCain, so stocks will probably not move on political reasons on Tuesday.

Wednesday

Wall Street gets its chance to react to Election Day.

While some may say that a Democratic sweep may cause a knee-jerk reaction on Wednesday, Wall Street studies the same polls as the rest of the nation. Traders tend to price in things like elections just like they do for any other contingency before the actual event ever happens. It’s the unexpected that cause violent moves in the market -- and it's unclear whether the market would go down based on political election results, anyway.

The biggest names that report come from the media and technology industries. Time Warner (TWX) and its sister company Time Warner Cable (TWC) will report before the bell, while News Corp (NWS), the parent company of Fox Business, will report after the closing bell.

Time Warner is expected to report earnings of 27 cents a share while News Corp. is expected to report earnings of 23 cents a share, according to Thomson Reuters.

The technology names are all after the bell and will impact Thursday’s trading more than Wednesday’s trading. Technology bellwether Cisco Systems (CSCO) is expected to report earnings of 36 cents a share. Cisco, because it sells routers and other technology infrastructure products, is considered a key company to watch for the industry.

Other technology-heavy names include videogame maker Activision Blizzard (ATVI) and Web-commerce staple InterActiveCorp (IACI).

On the economic side of things, traders get the first of three of labor market-related reports. The ADP Employment survey is sometimes cited a market-moving report, but its ability to predict the Labor Department's report a couple of days later has been lackluster for several months now.

Thursday

Thursday is mostly quiet on the economic and earnings front. Wall Street will continue to digest the results from Election Day as close local and national contests are sorted out.

The biggest name that might affect overnight markets might be Toyota Motor Co. (TM), which is expected to report a profit of $2.05 a share.

The market also gets media giant Disney (DIS) after the market opens. Analysts expect the Dow member to report earnings of 49 cents a share.

Wall Street gets the second of this week’s labor reports. Initial jobless claims come every Thursday and tend to move the market heavily. Economists are looking for jobless claims to fall by 5,000 next week.

Other companies that report include Teva Pharmaceuticals (TEVA), NASDAQ OMX (NDAQ) and Anheuser-Busch (BUD).

Friday

It’s time for the “mother of all economic data.”

The Labor Department will release its jobs report on Friday at 8:30 a.m., and the market always moves heavily on the news.

Economists are expecting that the nation lost 175,000 jobs in October, on top of the 159,000 jobs that were lost on September, moving the country’s unemployment rate up to 6.3%. If the number of jobs lost or the unemployment rate comes in outside the consensus, expect a broad market reaction.

Struggling auto maker Ford (F) will report on Friday before the market opens. Analysts expect the struggling Detroit company to report a loss of 93 cents a share, according to Thomson Reuters.

Other names to report including electrical utility company Consolidated Edison (ED), and telecommunications company Sprint-Nextel (S).


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Market Winners and Losers: MetLife, Electronic Arts

The major market indexes gained about 1.5% each on Friday, Oct. 31. Here’s a list of some stocks that were the biggest winners and losers in the trading session.

Winners

MGIC Investment Corp. (MTG)

Shares traded at $3.87, up $1.46 a change of 60.6%, rebounding after taking a terrible slide on its last day in the S&P 500 index.

Dynegy Inc. (DYN)

The stock closed up 3.56, up 47 cents, a change of 15.2%. As commodities dropped this quarter, the company looks forward to a positive earnings report to be released next week.

International Game Technology (IGT)

Shares were up to $13.81, a gain of $1.80, or nearly 15%. That came after a dismal earnings report, but the company is continuing to make progress in the development of the server-based gaming that is expected to be deployed starting in 2009.

MetLife (MET)

The stock rose 15.6% or $4.72, to $34.92. The insurance giant struggled in the third quarter because of catastrophe claims that came in surrounding multiple hurricanes.

Winstream Corp. (WIN)

Like many of the smaller telecoms have done well in recent weeks; today they were up 14.4% to $7.46 despite earning being down in recent months.

Losers

Cummins Inc. (CMI)

The stock finished the day at $26.09, down nearly 18% despite a great quarter because the company cut guidance for the rest of the year and expectations are down.

Electronic Arts Inc. (ERTS)

The company posted wider-than-expected losses, and plans to lay off an additional 6% of the work force drove prices down. The shares ended the day down more than 17% closing at $22.90.

Sun Microsystems (JAVA)

Sun reported a $1.7 billion loss as the company suffered from a technology slowdown. Also, the company reported a devaluing from the recent acquisition of Storage Technology Corp.

Carnival Corp. (CCL)

Stock prices fells sharply as the board of directors suspended the next quarter’s dividend as a result of the volatile market. It finished the day down nearly 12% at $25.29.

Teco Energy Inc. (TE)

Third-quarter profit fell 37% due largely to a decline in the coal business. The electric, natural gas and utility owner watched its stock fall 10.7% to end the day at 11.5%. The company does have a positive outlook for 2009.


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FDIC Seizes Freedom Bank

Freedom Bank of Bradenton, Fla., became the 17th bank insured by the Federal Deposit Insurance Corp. to be closed down this year, the FDIC announced Friday evening.

Fifth Third Bank (FTIB), which is based in Grand Rapids, Mich., was named by the FDIC as the receiver of the assets. All four branches of Freedom Bank will open on Monday as branches of Fifth Third.

“There is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said. “Over the weekend, depositors of Freedom Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.”

However, it cautioned that “Customers of both banks should continue to use their existing branches until Fifth Third can fully integrate the deposit records of Freedom Bank.”

The FDIC estimated that its insurance fund will take a hit of between $80 million and $104 million.

Freedom Bank had total assets of $287 million and total deposits of $254 million as of Oct. 17. Fifth Third agreed to assume all the deposits for a premium of 1.16%.

Fifth Third is also going to purchase about $36 million of assets from Freedom Bank, and the FDIC will hold onto the remaining assets for the time being.

Customers can call the FDIC at 800-591-2767 with any questions, or visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/freedom.html


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Wall Street's Red October Ends Green

Wall Street capped off one of the most frightening months in history on a high note Friday as the Dow jumped more than 100 points, giving the index its first two-day win streak in five weeks.

Today’s Market

The Dow Jones Industrial Average jumped 144.32 points, or 1.57%, to 9325.01, the broader S&P 500 rose 14.66 points, or 1.54%, to 968.75 and the Nasdaq Composite gained 22.43 points, or 1.32%, to 1720.95. The consumer-friendly FOX 50 added 6.95 points, 0.95%, to 738.14.

While October was as ugly as a month as you can imagine -- the worst since August 1998 -- the past week was as good as it gets: the blue-chip index surged 11.3%, or roughly 1,000 points, in its best weekly performance in 34 years. Most of that massive rally stemmed from Tuesday’s 889-point surge on the Dow, the index’s second strongest point gain in history.

Friday’s gains came despite any groundbreaking developments and in the face of a litany of new, ugly economic reports. The markets shrugged off the data, instead focusing on a solid rally from banking stocks.

"Today it’s been monster buying in the financials. They are clearly the driving force in this market,” said Michael James, senior equity trader at Wedbush Morgan Securities.

American Express (AXP) and JPMorgan Chase (JPM) led the way up on the Dow Friday, offsetting losses from GeneralMotors (GM) and Coca-Cola (KO).

Tech stocks weighed on the Nasdaq Composite on Friday on earnings worries about video game publisherElectronic Arts (ERTS) and SunMicrosystems (JAVA). On the other hand, Wynn Resorts (WYNN) and Monster (MNST) led the percentage winners on the Nasdaq 100. Despite the gains, the Nasdaq Composite ended October with its steepest monthly losses since February 2001.

It shouldn't come as a surprise that October was one of the worst months on record as it featured the height of the credit crisis, including nearly frozen credit markets, the passage of the controversial $700 billion rescue plan and the realization that the global economy could be in a recession.

The results weren't pretty as the Dow suffered dizzying losses throughout the month, including its worst weekly percentage loss ever and its steepest one-day loss since 1987.

Wall Street also saw unprecedented levels of volatility in October, highlighted by eight of the top ten largest point swings since data began to be compiled in 1995. The average point swing was 593 points -- twice as much as the annual average.

That's not to say Wall Street didn't see impressive gains this month as the Dow posted three of its top ten point gains in history this October.

On Friday, it was the financial sector that provided the strength for the markets, jumping more than 4% as a group. The markets benefited from more evidence of the thawing credit markets. The latest signs came from the widely-watched Libor rate, which fell sharply overnight to 0.4% from 0.73%. Libor, or the London interbank offered rate, is the benchmark short-term lending rate.

Financial stocks were up across the board but banking giant Morgan Stanley (MS) soared even further despite UBS cutting the bank's earnings outlook for the current quarter.Also, JPMorgan saw big gains after unveiling a temporary freeze on foreclosures and enhancements for a loan modification program.

Crude oil ended higher onFriday, putting a positive spin on the commodity's worst monthly performance ever. After a late-day rally, the price of a barrel of oil ended $1.85 higher to $67.81. For the week, crude ended up $3.66 -- the first weekly gain in four weeks.

The modest rally did little to erase a $32.83 plunge in October that weighed heavily on energy stocks.Crude oil has come under serious pressure as the markets worry a possible global recession will drastically cut demand.

The markets largely ignored a Commerce Department report showing personal spending tumbled 0.3% in September -- the worst monthly performance since June 2004. The report came as little surprise after the government revealed on Thursday consumer spending had its worst quarterly performance in 28 years last quarter.

The Commerce Department also said personal incomes rose by 0.2% last month, compared to consensus estimates for incomes to be unchanged.

Also, the University of Michigan/Reuters consumer sentiment index registered a 57.6 reading in October, well below the 70 reading in September. The decline was expected as the past month has seen the height of the financial crisis and increased calls for a deep recession.

Corporate Movers

General Motors’ (GM) efforts to merge with Chrysler LLC hit a snag after the White House shot down financial assistance for the potential deal, Reuters reported. The developments likely mean a merger can’t happen until after the election and also open the door for Chrysler to restart talks with the Nissan-Renault alliance, the wire service reported.

Google (GOOG) and Yahoo! (YHOO) are considering walking away from a Web-advertising alliance as early as next week rather than make compromises to address anti-trust objections from the Justice Department, The Wall Street Journal reported.

Barclays (BCS)plunged double-digit percentages to 52-week lows after the U.K. banking giant sold a 33% stake to Middle Eastern investors for $12.1 billion.

JPMorgan Chase (JPM) said it won’t put any additional loans into the foreclosure process over the next 90 days while it expands its mortgage modification program to Washington Mutual (WM) and EMC customers. The bank said the enhanced program is expected to help 400,000 families with $70 billion in loans.

Electronic Arts (ERTS)cut its full-year earnings outlook and unveiled plans to slash 6% of its workforce, sending its shares to 52-week lows.

Chevron (CVX) earned $3.85 a share last quarter, 60 cents more than what analysts were expecting from of the oil giant. Profits surged to $7.9 billion from $3.7 billion a year ago on revenue of $78.87 billion.

Clorox (CLX) reported a 15% jump in its fiscal first-quarter earnings but cut its sales outlook for the rest of its fiscal year. The cleaning products company’s adjusted-profit of 95 cents per share easily topped expectations of 84 cents.

American Express (AXP) warned in a Securities and Exchange Commission filing that recent turmoil in the global capital markets may "materially hurt business and results of operations." The company also said it doesn’t expect the markets to improve in the "near future” and that if performance weakens further its debt ratings could be cut, impacting access to capital.

Carnival (CCL) fell sharply to 52-week lows after the cruise line suspended its dividend and warned it experienced a further slowdown in booking volumes.

Sun Microsystems (JAVA) posted a wider-than-expected adjusted-loss of 9 cents per share last quarter as sales declined by 7.1% to $2.99 billion. The servers manufacturer didn’t give a forecast.

Burger King (BKC) posted an adjusted-profit of 38 cents in the third quarter, missing Wall Street’s expectations by a penny. However, the fast food giant maintained its full-year outlook.

Global Markets

London's FTSE 100 jumped 85.69 points, or 2%, to end at 4377.34 while France's CAC40 Index ended up 79.25 points, or 2.33% to 3487.07.

Also, global markets tumbled overnight even after the Bank of Japan cut interest rates by 0.2% in an effort to fight the slowing economy. Japan's Nikkei fell 5% and Hong Kong's Hang Seng dropped 2.5%.


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Budget Cuts Force Phoenix to Cut Back on Bus Runs

PHOENIX--As part of its unprecedented budget cuts, the city of Phoenix plans to end early-morning and late-night bus runs while cutting back on Saturday service.

The City Council Tuesday voted unanimously to eliminate all trips before 5 a.m. and after 10 p.m.

Saturday service will be reduced to match Sunday levels, a reduction of 24 percent.

Bus riders have until Dec. 29 to find new ways of getting from place to place.

Phoenix officials said they hope to restore the routes when the economy improves.

The cuts were disappointing to transit advocates and bus riders, who say that eliminating bus service would disproportionately affect the poor and residents with disabilities.

Donna Powers, who uses a wheelchair, said cutting bus service would make it harder for transit-dependent people to work and shop and help the city recover economically.

"If people can't ride, there's going to be less buying," Powers said.

"We tend to overlook the fact. The weekday routes being eliminated account for 3,600 boardings per day."

Council members said they didn't have much of a choice but to accept the staff's recommendation to cut.
"It's very painful," Councilwoman Peggy Neely said.

The move, which will save an estimated $7.4 million between now and July 2010, comes as collections from Phoenix's Transit 2000 tax have fallen 6.9 percent over the past year.

The transit tax paid for a large expansion of Phoenix's bus service in 2000, but that's not the case now, city officials said.

"Our problem is that there is not enough money coming in to pay for the services we have," City Manager Frank Fairbanks said.

Further bus reductions will be made in July, as Phoenix attempts to close a $250 million budget deficit, officials said. An additional $10 million may need to be cut from the transit budget, said Tom Callow, a deputy city manager.

The Regional Public Transportation Authority that oversees the metro-area service is considering increasing fares as well, but they would not take effect until next year if approved.


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